Abstract

The purpose of this article is to examine the existing law about Value Added Tax (VAT) in Bangladesh along with the collection of VAT in Bangladesh for searching of the implications of the prevailing VAT system. VAT, the new idea of tax system, is a consequence of the pressure of the World Bank and all donor-groups of Bangladesh due to growth of GNP/GDP. This article also elucidates the prevailing laws and regulations for the introducing VAT as an alternate to sales tax law in Bangladesh. The laws and rules regarding value added tax (VAT) in Bangladesh are contained in the “Value Added Tax Act, 1991” and the “Value Added Tax Rules, 1991” which have come into force with effect from 1st day of July 1991. It further highlights the need for a broad based Value Added Tax (VAT) which is proposed to be introduced in the country. The VAT is expected to raise substantial additional revenue in the coming 2-3 years which will amount to increase the Tax to GDP ratio by 2-3%. It also explains that those laws and rules regarding Value Added Tax (VAT) in Bangladesh have been amended by the Finance Act in every year for the improvement of financial system in Bangladesh.